SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from --------- to -------
Commission File Number 0-13300
THE HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY
(Exact name of registrant as specified in its charter)
CONNECTICUT 06-0384680
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE STATE STREET, HARTFORD, CONNECTICUT 06102
(Address of principal executive offices) (Zip Code)
(860) 722-1866
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if
changed since the last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
The number of shares outstanding of the registrant's common stock without par
value, as of October 31, 1996: 20,031,707
THE HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY
INDEX
PART I FINANCIAL INFORMATION PAGE
Consolidated Statements of Operations for the
Quarters and Nine Months Ended September 30, 1996
and 1995 (unaudited)............................................. 3
Consolidated Statements of Financial Position as
of September 30, 1996 (unaudited) and December 31,
1995............................................................ 4
Consolidated Statements of Cash Flow for the
Nine Months Ended September 30, 1996 and 1995
(unaudited)..................................................... 5
Notes to Consolidated Financial Statements...................... 6
Management's Discussion and Analysis of
Consolidated Financial Condition and Results
of Operations................................................... 7
PART II OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K....................... 14
SIGNATURES.......................................................... 15
<PAGE>
THE HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY
Consolidated Statements of Operations
Unaudited
(In millions, except per share data)
<TABLE>
Quarter Nine Months
Ended September 30 Ended September 30
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Insurance premiums $ 113.8 $ 98.3 $ 335.1 $ 290.0
Net engineering services 14.0 65.9 40.8 190.3
Net investment income 7.6 6.5 23.5 20.5
Realized investment gains 2.5 1.0 8.5 2.5
---------- ---------- --------- ---------
Total revenues 137.9 171.7 407.9 503.3
---------- ---------- --------- ---------
Expenses:
Claims and adjustment 54.5 38.0 155.4 114.8
Policy acquisition 21.4 20.3 63.9 58.5
Underwriting and inspection 34.2 29.6 102.3 90.4
Net engineering services 12.4 60.3 36.0 173.0
Interest 0.0 0.4 0.9 1.2
---------- ---------- --------- ---------
Total expenses 122.5 148.6 358.5 437.9
---------- ---------- --------- ---------
Equity in Radian International LLC (0.3) - 7.1 -
---------- ---------- --------- ---------
Income before taxes 15.1 23.1 56.5 65.4
Income taxes:
Current 3.2 6.1 16.4 19.2
Deferred 0.3 0.7 (1.9) 0.2
---------- ---------- --------- ---------
Total income taxes 3.5 6.8 14.5 19.4
Net income $ 11.6 $ 16.3 $ 42.0 $ 46.0
========== ========== ========= =========
Net income per share: $ 0.58 $ 0.80 $ 2.07 $ 2.25
========== ========== ========= =========
Dividends declared per share $ 0.57 $ 0.57 $ 1.71 $ 1.67
Based on average shares
and common stock equivalents 20.1 20.4 20.2 20.4
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
THE HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY
Consolidated Statements of Financial Position
(In millions, except per share data)
<TABLE>
September 30, December 31,
1996 1995
(Unaudited)
--------- -----------
<S> <C> <C>
Assets:
Cash $ 7.4 $ 9.3
Short-term investments, at cost 78.7 73.8
Fixed maturities, at fair value
(cost - $233.5; $247.6) 235.0 255.3
Equity securities, at fair value
(cost - $186.5; $155.0) 257.0 215.4
---------- -----------
Total cash and invested assets 578.1 553.8
Insurance premiums receivable 106.5 87.2
Engineering services receivable 11.3 68.8
Fixed assets 32.1 62.3
Prepaid acquisition costs 43.0 34.1
Capital lease 16.2 16.8
Equity in Radian International LLC 71.8 -
Reinsurance recoverable 90.1 47.9
Other assets 103.5 100.6
---------- -----------
Total assets $ 1,052.6 $ 971.5
========== ===========
Liabilities:
Unearned insurance premiums $ 270.5 $ 216.2
Claims and adjustment expenses 256.7 190.9
Short-term borrowings 3.6 13.4
Long-term borrowings 25.1 25.6
Capital lease 27.8 27.8
Deferred income taxes 21.6 18.9
Dividends payable 11.4 11.6
Minority Interest 20.0 20.0
Other liabilities 77.1 106.0
---------- -----------
Total liabilities 713.8 630.4
---------- -----------
Shareholders' equity:
Common Stock (stated value; shares authorized
50.0; shares issued 21.3; shares
outstanding 20.0; 20.3) 10.0 10.0
Additional paid-in capital 34.1 33.9
Unrealized investment gains, net of tax 45.7 43.9
Retained earnings 312.6 305.1
Treasury stock, at cost; (shares 1.3; 1.0) (59.3) (47.7)
Benefit plans (4.3) (4.1)
---------- -----------
Total shareholders' equity 338.8 341.1
---------- -----------
Total liabilities and shareholders' equity $ 1,052.6 $ 971.5
========== ===========
Shareholders' equity per common share $16.91 $16.81
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
THE HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY
Consolidated Statements of Cash Flows
Unaudited
(In Millions)
<TABLE>
Nine Months Ended
September 30,
1996 1995
---------- ----------
<S> <C> <C>
Operating Activities:
Net income $ 42.0 $ 46.0
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization 9.3 14.6
Deferred income taxes (1.9) 0.2
Realized investment gains (8.5) (2.5)
Change in:
Insurance premiums receivable (19.3) 4.7
Engineering services receivable (2.2) 2.3
Prepaid acquisition costs (8.8) 2.2
Reinsurance recoverable (42.2) 11.4
Unearned insurance premiums 54.2 6.3
Claims and adjustment expenses 65.8 (18.6)
Equity in Radian International LLC (3.6) -
Other (12.3) (1.7)
---------- ----------
Cash provided by operating activities 72.5 64.9
---------- ----------
Investing Activities:
Fixed asset dispositions (additions), net 0.2 (8.2)
Investments:
Purchase of short-term investments, net (4.9) (38.6)
Purchase of fixed maturities (66.4) (134.2)
Proceeds from sale of fixed maturities 74.7 88.2
Redemption of fixed maturities 5.5 13.1
Purchase of equity securities (113.7) (77.1)
Proceeds from sale of equity securities 88.2 107.7
Cash transferred to equity in Radian
Int'l LLC (0.8) -
---------- ----------
Cash used in investment activities (17.2) (49.1)
---------- ----------
Financing Activities:
Decrease in short-term borrowings (9.8) (8.1)
Increase (decrease) in long-term debt (0.5) 24.9
Dividends paid to shareholders (34.7) (33.7)
Repayment of employee stock ownership plan debt - (1.6)
Purchase of treasury stock (11.5) (3.0)
---------- ----------
Cash used in financing activities (56.5) (21.5)
---------- ----------
Net decrease in cash (1.2) (5.7)
Cash at beginning of period 8.6 12.1
---------- ----------
Cash at end of period $ 7.4 $ 6.4
========== ==========
Interest paid $ 1.1 $ 3.4
---------- ----------
Federal income tax paid $ 12.9 $ 14.7
---------- ----------
</TABLE>
See Notes to Consolidated Financial Statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. General
The interim financial statements in this report include adjustments based
on management's best estimates and judgments, including estimates of future
loss payments, which are necessary to present a fair statement of the results
for the interim periods reported. These adjustments are of a normal,
recurring nature. The financial statements are prepared on the basis of
generally accepted accounting principles and should be read in conjunction
with the financial statements and related notes in the 1995 Annual Report.
2. Radian International LLC
Effective January 16, 1996, The Hartford Steam Boiler Inspection and Insurance
Company (HSB) and The Dow Chemical Company (Dow) formed a new company,
Radian International LLC (Limited Liability Company), which provides
environmental, information technology, and strategic chemical management
services to industries and governments worldwide. The new company, consisting
of assets contributed by Dow's subsidiary, Dow Environmental Inc. (DEI) and
HSB's subsidiary, Radian Corporation, is headquartered in Austin, TX.
According to the terms of the agreement, the ownership of Radian
International LLC is initially 60 percent Dow and 40 percent HSB, via the
wholly owned subsidiaries of each company. Income to HSB will be subject to
a preference return in the first two years. As is customary in joint
ventures, the agreements between HSB and Dow provide various alternatives
for either party to dissolve the business, distribute assets and liabilities,
or sell their interests subject to certain rights of first refusal. In 1996,
HSB's interest in Radian International LLC is accounted for in the consolidated
financial statements under the equity method of accounting. In 1995, the results
of Radian Corporation were fully consolidated.
3. Industrial Risk Insurers
Effective December 1, 1995, HSB increased its participation in Industrial Risk
Insurers (IRI) from approximately 0.5 percent to 14 percent. IRI is a
voluntary joint underwriting association providing property insurance for the
class of business known as Highly Protected Risks - larger manufacturing,
processing, and industrial businesses which have invested in protection
against loss through the use of sprinklers and other means. IRI has a fiscal
year ending November 30 and provides quarterly reports to member companies of
the organization. As a result HSB's 1995 increased participation is reflected
in 1996 results. The additional participation increased revenue and expenses
for 1996 as well as several balance sheet accounts.
HSB recently announced that its participation in IRI would increase to 23.5%
effective December 1, 1996.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF CONSOLIDATED FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
SEPTEMBER 30, 1996
RESULTS OF OPERATIONS
(dollar amounts in millions)
Consolidated Overview
Quarter Ended Nine Months Ended
September 30 September 30
1996 1995 1996 1995
---- ---- ---- ----
Insurance premium $ 113.8 $ 98.3 $ 335.1 $ 290.0
Net engineering services revenues 14.0 65.9 40.8 190.3
Net investment income 7.6 6.5 23.5 20.5
Realized investment gains 2.5 1.0 8.5 2.5
----- ----- ----- -----
Total revenues $ 137.9 $ 171.7 $ 407.9 $ 503.3
===== ===== ===== =====
Equity in Radian International
LLC $ (0.3) $ - $ 7.1 $ -
===== ===== ===== =====
Net income $ 11.6 $ 16.3 $ 42.0 $ 46.0
===== ===== ===== =====
Net income per share $ 0.58 $ 0.80 $ 2.07 $ 2.25
===== ===== ===== =====
Net income per share for the third quarter of 1996 decreased 28% percent from
the third quarter of 1995 and decreased 8% percent for the first nine months
of 1996 compared to 1995. Third quarter results were negatively impacted by
losses associated with recent hurricanes and flooding and lower earnings
from HSB's Radian International LLC joint venture.
Insurance premiums grew 16% percent for both the third quarter and the first
nine months of 1996, with the increased participation in IRI the largest
contributing factor. The third quarter combined ratio increased from 89.0
percent in 1995 to 96.3 percent in 1996; while the first nine months
combined ratio increased from 90.4 percent in 1995 to 95.5 percent.
Engineering services profit, including the equity in Radian International
LLC, decreased 77 percent for the third quarter and 31 percent for the
first nine months. Exclusive of the Radian impact, engineering services
revenue increased 13 percent from the third quarter last year and 10
percent over the first nine months last year.
Consolidated revenues in the third quarter of 1995 include $53.4 million of
revenue from Radian Corporation; Radian International LLC is reported using
the equity method of accounting in 1996. Under this method, the detailed
revenues and expenses and assets and liabilities of Radian International
LLC are not presented in the 1996 financial statements. The first nine months
of 1995 include $153.1 million of revenue from Radian Corporation.
Exclusive of Radian Corporation, consolidated revenues increased 17 percent
and 16 percent for the third quarter and first nine months of 1996,
respectively, from comparable periods in 1995.
The effective tax rate for the third quarter and first nine months was 23
percent and 26 percent, respectively, compared to 29 percent and 30 percent
for the comparable prior year periods. Tax rate fluctuations occur as
underwriting results change the mix of pretax income between fully
taxable earnings and tax preferred investment income. The Company continues to
manage its use of tax advantageous investments to maximize after tax earnings.
The additional participation in IRI increased revenue for the quarter by $7.0
million and year to date $26.7 million. The additional participation also
impacted the balance sheet at September 30, 1996. The major balance sheet
increases from December 31, 1995 related to IRI included insurance premiums
receivable ($17.6 million), unearned insurance premiums ($33.3 million),
claims and adjustment expenses ($28.9 million) and reinsurance recoverable
($14.4 million).
With Radian International LLC being accounted for on the equity basis of
accounting in 1996, certain balance sheet accounts at September 30, 1996
have been reduced. The major changes from December 31,1995 included
reductions to engineering services receivable ($59.7 million),
fixed assets ($22.6 million), other assets ($23.0 million) and other
liabilities ($22.0 million).
Recent Accounting Developments
In October 1995, the Financial Accounting Standards Board (the Board) issued
Statement of Financial Accounting Standards No. 123 (SFAS 123) "Accounting
for Stock-Based Compensation" effective for fiscal years beginning after
December 15, 1995. SFAS 123 allows entities to adopt the fair value based
method of accounting for stock compensation or continue under the current
accounting practice. Entities electing to remain with the current accounting
practice must make pro forma disclosures of net income and earnings per share
as if the fair value based method of accounting in this Statement had been
applied. The Company expects to make pro forma disclosure of awards granted
in 1995 and future years and has not yet settled on a method of valuation.
Insurance Operations
Insurance operations include the insurance results of The Hartford Steam Boiler
Inspection and Insurance Company, HSB Engineering Insurance Limited
(HSB-EIL), The Boiler Inspection and Insurance Company of Canada (BI&I)
and The Allen Insurance Company, Ltd.
Quarter Ended Nine Months Ended
September 30 September 30
------------- -----------------
1996 1995 1996 1995
---- ---- ---- ----
Gross earned premium $ 143.1 $ 116.1 $ 414.5 $ 342.7
Ceded premium 29.3 17.8 79.4 52.7
----- ----- ----- -----
Insurance premium 113.8 98.3 335.1 290.0
Claims and adjustment expenses 54.5 38.0 155.4 114.8
Underwriting, acquisition
and other expenses 55.6 49.9 166.2 148.9
----- ----- ----- -----
Underwriting gain $ 3.7 $ 10.4 $ 13.5 $ 26.3
===== ===== ===== =====
Gross earned premiums in the third quarter and year to date 1996 increased 23
percent and 21 percent, respectively, from comparable periods in 1995. This
increase was primarily attributable to the increased participation in IRI
($17.7 million for the third quarter and $55.6 million year to date) and to
growth in the global markets. Gross earned premiums representing coverage
outside the U.S. increased 21 percent in the third quarter and 12 percent
year to date 1996 compared to prior year periods.
Increases in ceded premium of 65 percent in the current quarter and 51 percent
year to date were primarily due to the additional participation in IRI.
The loss ratio increased from 38.7 percent in the third quarter of 1995 to
47.9 percent in the current quarter, and from 39.6 percent for the first
nine months of 1995 to 46.4 percent for 1996 year to date primarily due to
recent hurricanes and flooding, unusually severe winter weather and higher
frequency of claims. Claims and adjustment expenses increased 43 percent in
the current quarter and 35 percent year to date compared to the same periods
in 1995. The increase was due to losses from weather-related storms and the
increased share in IRI. Gross claims and adjustment expenses for the third
quarter 1996 and 1995 were $79.0 million and $37.5 million, respectively.
This compares to 1996 and 1995 nine month gross claims and adjustment expenses
of $215.0 million and $123.4 million, respectively. IRI accounted for gross
claims and adjustment expenses of $2.2 million for the third quarter of 1996
and $33.9 million year to date 1996.
Underwriting, acquisition and other expenses increased approximately 11 percent
in the current quarter and 12 percent year to date compared to the same 1995
periods. The increase was primarily due to increased participation in IRI
and additional expenses related to growth in the global sector.
The components of the combined ratio, were as follows:
Quarter Ended Nine Months Ended
September 30 September 30
------------- -----------------
1996 1995 1996 1995
---- ---- ---- ----
Loss ratio 47.9% 38.7% 46.4% 39.6%
Expense ratio 48.4% 50.3% 49.1% 50.8%
---- ---- ---- ----
Combined ratio 96.3% 89.0% 95.5% 90.4%
==== ==== ==== ====
Engineering Services Operations
Quarter Ended Nine Months Ended
September 30 September 30
------------- -----------------
1996 1995 1996 1995
---- ---- ---- ----
Net engineering services revenue $ 14.0 $ 65.9 $ 40.8 $190.3
Net engineering services expenses 12.4 60.3 36. 173.0
----- ----- ----- -----
Operating gain $ 1.6 $ 5.6 $ 4.8 $ 17.3
===== ===== ===== =====
Net margin 11.4% 8.5% 11.8% 9.1%
Engineering services operations include the results of HSB's and BI&I's
engineering services, HSB Reliability Technologies (HSBRT) and the
Company's other engineering services subsidiaries. The 1995 results include
Radian on a fully consolidated basis. The 1996 engineering services results
do not include Radian as HSB's share of the newly formed joint venture results
were recorded as Equity in Radian International LLC rather than in net
engineering services revenue and other income statement accounts.
Net engineering services revenues decreased $51.9 million in the third
quarter and $149.5 million year to date compared to the same periods in 1995
due primarily to the change in presentation of Radian International LLC in
1996. Exclusive of Radian, engineering services revenue increased
approximately 13 percent in the current quarter over the third quarter 1995 and
10 percent for the first nine months of 1996 over the same period for 1995.
The growth in revenues was primarily due to increases generated by HSBRT as
their revenues were 34 percent higher in the third quarter of 1996 and 29
percent year to date over the same periods in 1995.
The consolidated engineering services operating gain decreased $4.0 million
in the current quarter from the third quarter of 1995 and $12.5 million for
the first nine months of 1996 from the same period in 1995. Again, this was
caused by the Radian International LLC transaction which resulted in a
separate presentation of Radian's results in 1996. Radian International LLC
results for the third quarter of 1996 decreased $4.3 million from the third
quarter of 1995 and for the first nine months of 1996 decreased $5.2 million
from the same period in 1995. Radian's results have suffered as a result of
delays associated with the transition of Radian's client mix to one that is
more commercial based than government based.
Investment Operations
Quarter Ended Nine Months Ended
September 30 September 30
------------- -----------------
1996 1995 1996 1995
---- ---- ---- -----
Net investment income $ 7.6 $ 6.5 $ 23.5 $ 20.5
Realized investment gains 2.5 1.0 8.5 2.5
----- ----- ----- -----
Pretax income from
investment operations $10.1 $ 7.5 $ 32.0 $ 23.0
===== ===== ===== =====
Net investment income increased 17 percent for the third quarter and 15 percent
year to date compared to the same periods in 1995. The increase was due
primarily to an increased level of investable assets and to a lesser extent
by dividend increases on the company's common stock investments. Invested
assets growth was due to significant cash flow from operations during 1995
and earnings on the receivable generated from the portfolio transfer of IRI.
Investment income in the global market also increased in the current quarter
over the third quarter of 1995 as these operations have shown significant
growth over the past year.
The Company's investment strategy continues to be to maximize total return
on the investment portfolio through investment income and capital
appreciation. The investment portfolio includes a wide variety of high
quality equity securities and both domestic and foreign fixed maturities. The
Company continues to manage its use of tax advantageous investments to maximize
after tax investment earnings. Realized investment gains changed
significantly over the prior year as the Company managed its portfolio to
respond to changing market conditions and tax planning opportunities.
Liquidity and Capital Resources
- -------------------------------
Balances at
September 30 December 31
-------------------------------
1996 1995
---- ----
Total assets $ 1,052.6 $ 971.5
Short-term investments 78.7 73.8
Cash 7.4 9.3
Short-term borrowings 3.6 13.4
Shareholder's equity 338.8 341.1
Liquidity refers to the Company's ability to generate sufficient funds to
meet the cash requirements of its business operations. The Company receives
a regular inflow of cash from maturing investments and engineering services
and insurance operations. The mix of the investment portfolio is managed
to respond to expected claim pay-out patterns. The Company also maintains a
highly liquid short-term portfolio to provide for immediate cash needs.
Cash provided from operations was $72.5 million in the first nine months of
1996 compared to $64.9 million in the first nine months of 1995. Insurance
operations cash flow increased as premiums collected were up 13 percent year
to date compared to the same period in 1995 and claims paid increased
slightly at 0.6 percent. The additional participation in IRI impacted
components of the Consolidated Statement of Cash Flows for 1996, including a
year to date impact of $7.7 million to cash provided from operations.
The Radian International LLC transaction had minimal impact on cash flow
from operations in the first nine months of 1996.
Capital resources consist of shareholders' equity and debt outstanding and
represent those funds deployed or available to be deployed to support
business operations. Shareholders' equity of $338.8 million at September
30, 1996 decreased by $2.3 million since December 31, 1995 primarily due to
treasury stock purchases. The decrease reflects net income of $42 million
for the first nine months and an increase in unrealized gains, net of tax,
of $1.8 million, offset by dividends of $34.5 million and treasury stock
purchases of $11.5 million.
At September 30, 1996, the Company had significant short-term and long-term
borrowing capacity. The Company is currently authorized to issue up to
$75 million of commercial paper. Commercial paper outstanding at September
30, 1996 and December 31, 1995 was $3.6 million and $12 million, respectively.
The Company is involved in three arbitration or litigation proceedings,
primarily with other insurers, regarding significant loss events that
occurred in the late 1980's and early 1990's. The areas of dispute concern
questions as to which insurer has responsibility for coverage of certain
property damage and business interruption losses sustained by the insureds.
It is management's position that the policies in question exclude such losses,
whereas others contend the policy language is broad enough to extend
coverage. The ultimate responsibility for such losses will be determined
through the arbitration or legal system. While the timing of the resolution of
these cases is unclear, management is of the opinion that an adverse
outcome will not have a significant material effect on the results of
operations or the financial position of the Company due to reinsurance
contracts in place for those years. Nevertheless, in the event the Company
and its reinsurers are obliged to pay significant sums pursuant to the
arbitration or legal proceedings, it is likely the Company's reinsurance
costs will increase in future periods.
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits -
(27): Financial Data Schedule
(b) Reports on Form 8-K -- Form 8-K filed on July 22, 1996 to announce the
election of Richard H. Booth as a director of the Registrant.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE HARTFORD STEAM BOILER
INSPECTION AND INSURANCE COMPANY
Date: November 14, 1996 By: /s/ Saul A. Basch
Saul A. Basch
Senior Vice President, Treasurer
and Chief Financial Officer
Date: November 14, 1996 By: /s/ Robert C. Walker
Robert C. Walker
Senior Vice President
and General Counsel
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements filed herewith and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<DEBT-HELD-FOR-SALE> 224
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 257
<MORTGAGE> 11
<REAL-ESTATE> 0
<TOTAL-INVEST> 571
<CASH> 7
<RECOVER-REINSURE> 90
<DEFERRED-ACQUISITION> 43
<TOTAL-ASSETS> 1053
<POLICY-LOSSES> 257
<UNEARNED-PREMIUMS> 271
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 29
0
0
<COMMON> 10
<OTHER-SE> 329
<TOTAL-LIABILITY-AND-EQUITY> 1053
114
<INVESTMENT-INCOME> 8
<INVESTMENT-GAINS> 3
<OTHER-INCOME> 14
<BENEFITS> 55
<UNDERWRITING-AMORTIZATION> 21
<UNDERWRITING-OTHER> 47
<INCOME-PRETAX> 15
<INCOME-TAX> 4
<INCOME-CONTINUING> 12
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12
<EPS-PRIMARY> .58
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
